The wet-dry study: Millions and millions of dollars of happiness

The answer to all of Dallas’ financial problems? Vote wet in November. That will create jobs, bring in sales tax riches, reverse the city’s economic decline in comparison to its suburbs, and bring national big box retailers to the city. Best yet, there is no downside!

That was the gist of the report issued by Keep the Dollars in Dallas, the group that gathered the signatures to get the wet-dry referendum on the ballot, at their media lunch and news conference yesterday. It’s true that the report, written by economist-for-hire Ray Perryman, didn’t promise manna from heaven. But it promised almost everything else.

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My favorite part of yesterday’s festivities? Perryman said the study’s margin of error was six to eight percent. But even if it’s off by one-third, he said, it will still bring the city millions and millions of dollars — too much money to turn down. So even if the report is wrong, we should still vote wet. Can’t beat that for efficiency, can you? More, after the jump:

First, the disclaimers: I’m probably going to vote for both wet-dry ballot issues, I’m not related to the Sigel’s liquor store chain, and I’m not related to Andy Siegel, the attorney representing the dry side.

The Perryman report throws around a lot of big words and big numbers, but is very short on methodology. Wamre, who has an MBA, asked Perryman about the actual number crunching, and the economist said he used city retail data and ran the figures through his proprietary formula to come up with the good news: An additional $3.4 billion in annual spending in Dallas, 29,000 new jobs, and $33.4 million in additional sales tax revenue.

Call me skeptical. The federal Bureau of Labor statistics reports that DFW residents spend 7/10ths of one percent of their annual income on alcohol. That comparison isn’t exact, since the government figures include the entire Metroplex. The numbers are confusing, but bear with me:

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• Dallas residents will need to spend an additional $1.7 billion for taxable items to get $33 million more in sales tax revenue, Under the state tax formula, the city gets 2 cents in sales tax revenue for every $1 spent on sales tax eligible items.

• That means we’ll need to spend an additional $119 million on beer and wine, assuming we spend according to the federal figures (seven-tenths of one percent times $1.7 billion). No, I don’t know where the rest of the $1.7 billion in spending is going to come from, but I’m giving Keep the Dollars the benefit of the doubt here.

• This means that each of the city’s 440,000 households will have to spend $270 more a year on beer and wine ($119 million divided by 440,000). Ask yourself: Are you going to buy 45 more six-packs of beer, at $6 a pop, just because Dallas goes wet?

• Perryman and Kroger’s Gary Huddleston, in response to my question, said that the sales tax revenue increase will also come from other things people buy when they go to the store to pick up their beer and wine. Food isn’t taxed, but things like dog food, paper towels, and shampoo are. Typically, they said, a little more than half of the items sold at grocery stores are taxable.

• Let’s allow for this, and assume half of that $270 will go for non-alcoholic items like paper towels. So we’ll only need to buy an extra $135 a year of beer or wine. If you buy wine, you’ll need to buy an extra case of wine a year, at $11 a bottle. Which may not seem like much, except that the average American only drinks one case of wine a year.

Perryman actually hit on the actual reason for the wet-dry election during his remarks. He said he expects Dallas grocery stores in dry areas to boost sales 4 to 6 percent if they’re allowed to sell beer and wine. Which is why Kroger and Walmart paid for the petition drive to get the referendum on the ballot. And which is fine with me. Just be honest about it. Does anyone really believe Walmart is pushing this out of the goodness of its heart?

2 Comments

While I think your delve into the numbers is interested, I suppose I’m still left with the question: why not?

Honestly, unless you think alcohol is the root of all evil, why would we not want to rid ourselves of these outdated laws. Even if passing this law does not create as much tax revenue as mentioned in the article, surely you can admit that it was create some degree of incremental revenue… and some is better than none.